Amendments to EC restructuring plan

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ING and EC agree on amendments to restructuring requirements and deadlines. Press release available at http://www.ing.com/Our-Company/Press-room/Press-release-archive/PressRelease/ING-reaches-agreement-on-amended-EC-Restructuring-Plan.htm

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Amendments to EC restructuring plan

  1. 1. Amendments to EC Restructuring PlanING and EC agree on amendments to restructuring requirements and deadlinesJan HommenCEO ING GroupAmsterdam – 19 November 2012www.ing.com
  2. 2. ING and EC agree to amended restructuring plan• Timelines extended to complete divestments of Insurance & Investment Management, taking into consideration the current market environment• Operations of WestlandUtrecht Bank will be merged with the recently created NN Bank, and will be divested along with Insurance Europe• Remaining support from Dutch State to be repaid in 4 equal tranches, including 50% exit premium, by May 2015. First tranche of EUR 1.125 bln will be paid 26 November 2012• Bans on acquisitions, price leadership and calling hybrids extendedThe amended agreement gives us more time and flexibility to complete the requiredrestructuring, while our strategic objectives remain unchanged. We will maintain themomentum in our restructuring programme, and we remain committed to repaying the Stateas quickly as possible.Amendments to EC Restructuring Plan 2
  3. 3. ING is making good progress on restructuring 2009 2010 2011 2012 2013EC Restructuring Announced 26 October 2009Repayment EUR 5 blnto Dutch State 21 December 2009Operationalseparation End 2009 1 January 2011Bank/InsuranceRepayment EUR 2+1 13 May 2011bln to Dutch StateSale of Insurance Announced 25 July 2011 closed 29 December 2011Latin AmericaSale of ING Direct USA Announced 16 June 2011 closed 17 February 2012Sale of Insurance China Merchant Funds - Announced 8 October 2012Asia/Pacific Insurance Malaysia - Announced 11 October 2012 Insurance Hong Kong Thailand - Announced 19 October 2012IPO preparation S1 registration filed with SEC 9 November 2012Insurance/IM USIPO preparation Stepping up efforts for base case IPOInsurance/IM EuropeAmendments to EC Restructuring Plan 3
  4. 4. Key revisions to EC restructuring agreement 2009 Agreement New agreement Asia >50% by end 2013, rest 2016Deadline insurance End 2013 US >25% in 2013, >50% 2014, rest 2016divestments EU >50% by end 2015, rest 2018Divestment Westland Merge part with NN Bank and divest To be divested by 2012Utrecht Bank with Insurance Europe IPO Repay state EUR 4.5 bln, 50% exit premium orState Repayment conversion option including 50% premium in 4 equal tranches; final payment by May 2015Acquisition Ban November 2012 Extended to November 2015, or until >50% of each insurance businesses divestedPrice Leadership Ban November 2012 Extended to November 2014,Ban on calling hybrids November 2012 or until State is fully repaidAmendments to EC Restructuring Plan 4
  5. 5. Deadlines for Insurance divestments extended End 2012 End 2013 End 2014 End 2015 End 2016 End 2017 End 2018 Insurance/IM Asia >50% 100% Insurance/IM US 25% >50% 100% Insurance/IM Europe >50% 100% Divestments complete & behavioural restrictions lifted• Divesting control (> 50% of shares) of a business qualifies as divestment for EC. At that stage ING will deconsolidate the business, and remaining interest can be sold down over 2 or 3 years• Acquisition ban, price leadership ban lifted once > 50% of each Insurance business is completed We remain committed to completing the restructuring as quickly as possible, however these deadlines give us more flexibility given the challenging environmentAmendments to EC Restructuring Plan 5
  6. 6. WestlandUtrecht to be combined with new NN Bank• Operations of WestlandUtrecht Bank will be merged with the recently created NN Bank• Combination will accelerate the strategy of NN Bank, which will grow to create a new mid-sized bank in the Netherlands under the strong Nationale-Nederlanden brand• NN Bank will offer a range of financial products, including: • mortgages • savings accounts • bank annuity products (banksparen) • investments • consumer insurance products • consumer credit • Core retail insurance products of NN Life and P&C products• NN Bank will have access to NN’s 2.5 million retail customers, and an integrated multi-channel distribution platform with more than 2000 independent financial advisors and 90 tied agents, as well as direct distribution through internet and telephoneAmendments to EC Restructuring Plan 6
  7. 7. NN Bank to grow to create a new mid-sized bank Expected start point WestlandUtrecht Transfer to NN Bank NN Bank New NN Bank 1/1/2013Mortgages EUR 37 bln EUR 2.6 bln EUR 2.6 blnConsumer credit EUR 0.2 bln EUR 0.2 bln EUR 0.2 bln + =Savings EUR 2.6 bln EUR 2.6 bln EUR 2.6 blnBank annuity EUR 0.3 bln EUR 0.3 bln• EUR 2.6 bln of WUB’s mortgage portfolio to transfer to NN Bank. Remainder to be run down over time• ING Bank will inject EUR 350 million of capital in NN Bank. An additional EUR 120 million will be injected if necessary prior to divestment to ensure a Tier-1 ratio of at least 12% for NN Bank in 2015• ING has agreed to target market shares on new production for mortgages and consumer credit until 2015 to ensure NN Bank has sufficient scale at the time of the divestment of Insurance Europe• NN Bank to become self-funding through growth in savings and bank annuity products, supplemented by capital markets funding. A maximum of EUR 2.7 bln in funding can be provided by ING at separation and that must take the form of marketable securities• ING Bank commits to support the development of NN Bank through caps on new mortgage production, free access to ATMs for NN Bank credit card holders, and other measuresAmendments to EC Restructuring Plan 7
  8. 8. Committed timeline to repay Dutch State15 • ING has committed to repay the remaining EUR 3 billion plus 50% exit premium to the Dutch State in 4 equal 3.5 tranches of EUR 1.125 bln 2.0 • Any accrued interest or coupons paid10 under the terms of the CT1 securities will be offset against the exit premium through partial use of the conversion 7.0 option to ensure total payments do not exceed EUR 4.5 bln 5 10.0 10.0 • Upon completion, total payments to 0.375 the Dutch State will amount to 135% 0.750 0.375 0.750 0.375 of the capital support received, leading 0.750 0.375 to a return of 12.5% based on the 0.750 0 committed timelines October Paid to November November March May 2015 Total 2008 date 2012 2013 2014 payments Core Tier I securities Premium & Coupon payments ING remains committed to repaying the Dutch State as quickly as possible and will accelerate payments if this is prudent under the prevailing economic circumstances.Amendments to EC Restructuring Plan 8
  9. 9. Behavioural Commitments and Appeal Process • Acquisition ban and price leadership bans extended to 18 November 2015, or until >50% of each of the Insurance businesses have been divested, if earlier • Terms of price leadership ban adjusted: • Price leadership ban will no longer apply to the Netherlands • >5% market share (non ING Direct): ING can not be among the top 3 in terms of pricing for standard retail products • ING Direct EU: ING can not be the market leader measured against the 10 largest competitors1 • Ban on calling hybrids extended until 18 November 2014 or until State is repaid, if earlier: • EC has given permission for ING to call the EUR 1.25 billion hybrid outstanding from ING Verzekeringen NV, which has a change of control clause that would be triggered by the divestment of Insurance Asia • ING intends to call the above hybrid on 21 December 2012 • This agreement has been approved by the EC and will replace the EC’s decision dated 11 May 2012, so ING has withdrawn its appeal against the earlier decision1 New terms will come into effect three months after the EC decision. Until then 2009 terms continue to applyAmendments to EC Restructuring Plan 9
  10. 10. Wrap-up• We remain committed to executing the restructuring plan to create stand-alone banking and insurance companies, and we will continue the momentum we have demonstrated in recent years• Today’s agreement increases flexibility for ING to complete its agreed restructuring plan, taking into consideration the current market environment• ING is pleased that a solution has been found for the sale of WestlandUtrecht Bank, creating a new mid-sized competitor in the Netherlands under the NN brand• ING remains committed to repaying the State as quickly as possible and will accelerate payment if prudent under the prevailing economic circumstancesAmendments to EC Restructuring Plan 10
  11. 11. DisclaimerING Group’s Annual Accounts are prepared in accordance with International Financial Reporting Standards as adopted by theEuropean Union (‘IFRS-EU’).In preparing the financial information in this document, the same accounting principles are applied as in the 2011 ING GroupAnnual Accounts. All figures in this document are unaudited. Small differences are possible in the tables due to rounding.Certain of the statements contained herein are not historical facts, including, without limitation, certain statements made offuture expectations and other forward-looking statements that are based on management’s current views and assumptionsand involve known and unknown risks and uncertainties that could cause actual results, performance or events to differmaterially from those expressed or implied in such statements. Actual results, performance or events may differ materiallyfrom those in such statements due to, without limitation: (1) changes in general economic conditions, in particular economicconditions in ING’s core markets, (2) changes in performance of financial markets, including developing markets, (3)consequences of a potential (partial) break-up of the euro, (4) the implementation of ING’s restructuring plan to separatebanking and insurance operations, (5) changes in the availability of, and costs associated with, sources of liquidity such asinterbank funding, as well as conditions in the credit markets generally, including changes in borrower and counterpartycreditworthiness, (6) the frequency and severity of insured loss events, (7) changes affecting mortality and morbidity levelsand trends, (8) changes affecting persistency levels, (9) changes affecting interest rate levels, (10) changes affecting currencyexchange rates, (11) changes in investor, customer and policyholder behaviour, (12) changes in general competitive factors,(13) changes in laws and regulations, (14) changes in the policies of governments and/or regulatory authorities, (15)conclusions with regard to purchase accounting assumptions and methodologies, (16) changes in ownership that could affectthe future availability to us of net operating loss, net capital and built-in loss carry forwards, (17) changes in credit-ratings,(18) ING’s ability to achieve projected operational synergies and (19) the other risks and uncertainties detailed in the RiskFactors section contained in the most recent annual report of ING Groep N.V. Any forward-looking statements made by or onbehalf of ING speak only as of the date they are made, and, ING assumes no obligation to publicly update or revise anyforward-looking statements, whether as a result of new information or for any other reason. This document does notconstitute an offer to sell, or a solicitation of an offer to buy, any securities.www.ing.comAmendments to EC Restructuring Plan 11

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